Do These 2 Things Before You Do A Financial Plan

Host of Elementality, Jordan Haines, CFP®, discusses two things every financial advisor should do with a client before they engage in financial planning with them:

Step 1: Ensure the client is sufficiently oriented to their financial situation

Step 2: Ensure the client has the foundational financial behaviors in place

Jordan explores why every advisor should have specific steps in their process to account for these things and tactical way an advisors can assess whether these things have been done for a client.


Welcome to Elementality everyone. I’m Jordan Haines, financial vitals expert here at elements. And I’m going to do a show all by myself today. Now many of you are thinking, rolling your eyes, thinking, oh man, we gotta hear from Jordan again, but guys. There is something on my mind and I want to explore it with you. 

So that’s what we’re going to do today. Now next week, we’re going to get back into [00:01:00] the main swing of things. And if you all like this, I want you to let me know if you want to hear more of these solo episodes, let me know, happy to record them. I have lots of things on my mind that I could spout out for hours and hours and hours. 

But today I want to bring something to you. That is, that I feel is so. Fundamentally important to what we are doing is financial advisors that I want to bring it to you today. 

To get started. I want to reference a conversation I had with Taylor Westergaard she’s a financial planner. Turn financial coach. Um, the ironer viewed on the show two or three weeks ago. I think it was episode 1 67. I’ll link to that in the show notes. One of the things that she talked about was the fact that many of her clients that she works with. Are coming from financial advisors, currently paying a financial advisor and have a relationship with one. But still need help from her anyway. And when I pushed her on why. Why she thinks that is one of the things that you brought up, that she hears. Um, somewhat frequently from clients is they don’t believe in the recommendations that their advisor giving them. 

They don’t believe in the financial plan that’s been generated on their behalf. I think that’s really, really interesting insight. Why is that? [00:02:00] Why do our clients, or why do the clients of financial advisors not believe? In the recommendations that have been set in front of them. 

Now, there are two things that I want to explore in this recording today. Two things that I feel like are the primary reasons why a client might not believe in what we are telling them, or might not be confident in the value they’re getting from me, their financial advisor. Those two things are number one. Making sure that your clients are sufficiently oriented to their financial situation. 

And number two, making sure that your clients have the foundational behaviors and habits in place. Let’s explore each of these.

 In my experience, working with people. Um, outside of the world of financial advice. One of the main reasons I think that people don’t believe in our recommendations is we haven’t spent sufficient time with them. Orienting them. Uh, helping them truly understand their financial situation and what it means to them. That’s what I mean by financial orientation. If we don’t sufficiently orient someone to their financial [00:03:00] situation before we present recommendations or a financial plan. It’s really hard for them to believe it because they don’t actually understand their situation. I hadn’t experienced like this even just last night. 

And I’m recording this on Monday. Last night. I had a conversation with my parents and they would like to retire. In fact, they probably would have retired two or three years ago if they didn’t find every excuse not to retire. And one of the things that was really concerning to them is this idea of probability of success. 

Right. They had a pretty high probability of success given to them by their advisor. And I explored that with them and talked about what that meant. And at the end of the day, They just didn’t really understand their situation. They didn’t know where they stood. They couldn’t accurately answer the question. How are we doing or are we doing okay? And until they could answer that question in their mind themselves, not with me answering it for them. Because their advisor had answered that question. 

Are you doing okay? Many times. They didn’t believe it. They needed to be able to answer that question themselves. And until they could answer that question themselves, they could not move forward with the plan that had been presented to them. So I spent some time with [00:04:00] them oriented them to their situation. 

They felt a little bit better. There’s still a lot more psychological things that need to be done there, but that’s an entirely separate conversation, but I bring that up as an example for us advisors to keep in mind that when we are presenting plans or recommendations, We need to ask ourselves the question. Is this person sufficiently oriented to their financial situation. Meaning. Do they understand their finances and how it relates to them personally? 

Do they have a personal relationship with their own financial situation? Not through us. If I were to take an, a really good gauge of success here is if I, as the advisor were to take myself out of the equation and say, I’m not even here. The question that I want to ask is, does my client understand independent of me, their financial situation? And if I can’t answer that question, we need to stop. 

We need to make sure that client is cause efficiently oriented before we jump in to the financial plan. So that’s all really important, but one of the big things that I want to explore here is this, this thought that I’ve had recently. Around the world of physical health. [00:05:00] I’m just starting to get back into. Um, Strength training and exercise and all the things that I’ve put off. 

Cause we just had a baby three or four months ago, which is exciting for us. We’ve loved it, but it’s completely thrown off my exercise routine. So I’m just starting to get back into it and. Um, there are certain behaviors that I do that some might call optimizing my physical health. I don’t do it for that reason. 

I do it because I enjoy it, but things like ice baths and stuff like that, that are really valuable for people that maybe improve your physical health to the, you know, one or 2%. But there are these core habits and behaviors in the world of physical health that I think most people understand. What are those? Well, am I sleeping? 

Well, am I getting about eight hours of sleep at night? Um, am I eating well? Fruits and vegetables and protein and carbs. And do I have a healthy balance of those at my drinking enough water, things like that. And then the third really is. Am I getting enough exercise? Am I, am I moving? Am I doing the things that I need to there? I think most people. If we have those three habits and behaviors checked off and we’re doing okay with those, I think most of us know that we’re 95% of the way there. I mean, if we [00:06:00] just look at the population of America, if all of us were to focus on those three things, we all had good amount of sleep. We were healthy eaters and we moved enough. 

I think most of us knew what the outcome of that would be.

But what if, instead of focusing on these three core habits and behaviors and my physical health. I instead focused on optimizing my physical health is actually listening to Andrew Huberman and all the people out there that are talking about improving your health by one or 2%. What if I focused on that before I focused on foundational habits? It would probably do nothing. It would probably do very little to my physical health to actually move the needle. And that is essentially what we’re doing as financial advisors.

 Are we optimizing too soon? Are we focused on investment returns and portfolio management and tax planning, strategies and Roth conversion, and all of the things that we do really successfully as advisors before we’ve ever sat down with the client to make sure that their core habits and behaviors are in check. I would bet. 

No. And I think that’s the reason back to the [00:07:00] beginning of our conversation. Why Taylor Westergaard is so successful as a financial coach. And why she works with financial advisor clients. Because those clients do not know if they’re doing the right things. They don’t have their right core habits of behaviors. 

So what are those. Well, I I’m a little biased here, but I think elements does a really good job at reporting on these. And those of you who are interested if you go to our website and look at the middle row of elements, we call this the cashflow row or the income utilization row. These four elements helped me answer the question as a normal person. Am I using my income wisely. So how this works is, uh, re report someone’s income in there. 

Someone’s income is going to one of four areas. It’s either being spent saved, going towards debt or taxes. Right? So in an ideal world, those add up to a hundred percent. Well, one of the core habits that I would like to see all of my clients have is a. A a decent savings rate. Let’s say that a minimum of 10%. Or if I’m working with a business owner, maybe it’s 20%. If my client has a 10 to 20% savings rate, I can almost guarantee that over the, the, their lifetime, they’re going to be in [00:08:00] a lot better situation than someone who had a 2% savings rate, but optimize their investments. Because I have direct control over my savings. 

I have direct control over how much I spend. I have direct control over my debt repayment strategy. Those are the things that are my core habits and behaviors that I have ownership over. I would venture to guess that those are the most important things that we can focus all our time on. So as you sequence your client journey. I want you to think about a couple of things. 

Number one. Is your client sufficiently oriented to their financial situation. That should be step number one in every single service offering. Now I’m a little biased towards elements. I think it does the best job out there in the marketplace, as far as orienting someone to their situation. But there are plenty of others like Taylor Westergaard who uses something like Monarch money to orient someone to their situation. 

Are your clients sufficiently oriented to their financial situation? The criteria the here that you want to do is if you took yourself out of the equation, Could that person independent of you understand their financial situation enough to make [00:09:00] some basic financial decisions. That’s step one. Step two is what are the core habits and behaviors, the foundational behaviors that need to be handled before you ever optimize your client’s financial situation. 

Things like savings, things like spending. Things like debt. A lot of them sent around capital because that is the thing that I can control as a human being. What are the things that I can’t control? Things like investment returns. Uh, risks that are outside of me, assumptions in the market, right. Things that are out of my control are probably the things that are more in the world of optimization. The things that I can control today are my habits. 

And my behaviors are those in check. Does this client have the right habits and behaviors? Are they oriented to their situation then? Only then I think we have the opportunity to optimize, right? We run the traditional financial planning process. We all have use your money. Use your money guide pro use your right capital. 

Use your fancy dancy. time value of money equation, spreadsheet, right? Do those things to forecast and understand what the future looks like so that you can optimize this person’s financial health tax [00:10:00] strategies, investment strategies, that state planning strategies, things like that, that are all around the world of optimization. 

But don’t do those until you’ve checked box one and box two, which is orient your client to their financial situation. Make sure that their foundational habits are in place. And only then. I think we have the opportunity to then optimize. And frankly, that’s going to be the situation in which your clients are bought into what you are doing. 

If you have not sufficiently done those things and you optimize too early. You’re going to have clients that aren’t satisfied with your situation now, are they going to fire you? Probably not. That’s just because switching costs are too high in our industry. It’s not because they’re pleased. It’s not because they’re actually receiving value from you. 

It’s just because it’s a pain in the butt to go out and transfer your assets and find another advisor. So think about that. Now. here’s the call to action. If I were to leave this conversation with each of you today. Number one. I want you to think about your process. 

If you were to onboard a client today, do you have a specific point in your client journey? Where you are oriented in them to their financial health. 

Is it a meeting? Is it a deliverable, a report. Is there some [00:11:00] time that you are making sure that they understand independent of you? What’s happening with their finances. The other thing that I want you to think about is do your clients. And frankly, you could just go through your client list right now. 

Do your clients have the baseline habits and behaviors in place? If you don’t have a way to track that you need to find one. Whether it’s a spreadsheet or in your CRM or higher elements. And we have a nice, cool view where you can look at all of your client’s scores to see, you know, what’s the, what’s the saving rate for every single client. 

You can see that at a snapshot. At a high level view, right? You need to have a way to understand what your core habits or behaviors of your clients. If there are some that don’t have those in place, you need to spend time with them before you ever do a financial plan, those behaviors need to be in place. 

So those are the two things. Let’s start by understanding what part of your process are you orienting people to their situation? And then step two, what are you doing to make sure your clients. foundational behaviors and habits are in place then. Resume financial planning as you always have. And without everyone. I’m going to leave you to it. 

Happy planning, good luck, orienting people to their situation. And as always, we’ll see you next [00:12:00] week. 

Show Notes

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